Where There Is a Redemption of Preference Shares 'Out of Profit

question 6

Multiple Choice

Where there is a redemption of preference shares 'out of profit':

• A) The redemption is recorded in the appropriations section of the profit and loss account.
• B) The redemption is recorded as an expense.
• C) The redemption is recorded as a liability and is amortised over a maximum of five years.
• D) The redemption is not recorded in the current period.
• E) The redemption is recorded against opening retained profits.

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Definitions:

Compensation

Payment or reward given for service, performance, or damage incurred.

Artisan

A skilled craftsperson who makes or creates things by hand that may be functional or strictly decorative.

Lien

A legal right or claim against a property, typically used as security for a debt or charge that must be paid off when the property is sold.

Innkeeper

An innkeeper is a person or the owner of an establishment that offers lodging, and sometimes meals and entertainment, to travelers.